Banks are currently accruing the biggest losses of their entire existence. At the same time, the shock of the Covid-19 pandemic is jolting the finance industry out of its inertia.

Everything that stood in the way of change before — things like budgets, personal targets, misaligned interests — are now rendered obsolete. And things that previously would take years to change, are now happening in days. 

Our CEO Ray Wyand shares his perspective on how the coronavirus pandemic and the resulting economic crisis is proving to be the much-needed catalyst for reinvention in banking.

Watch the video or read the transcript below:

The knowing-doing gap

Each year, over US$30 billion is spent by banks on seeking advice, but that advice is seldom followed. 

And this gap between what banks know they should be doing and what they actually do is one of the biggest problems that we’ve seen in the financial industry. 

Going into this crisis, banks had pretty robust balance sheets and very few of them looked like they were in any kind of solvency crisis. 

But if you look at their shareholder performance, some of these banks are down 50% since the lows of the last crisis compared to huge rallies in the price of some of the tech giants: the FAANG stocks, the Apples and the Amazons of the world.

So it’s very clear that from an investor standpoint, there is some scepticism about whether banks have the right strategy to come out of something like this and look meaningfully better. 

The industry is changing for the good

But one of the positive things I’ve seen is a renewed focus on doing things versus talking.

By that I mean, you look at companies like Wells Fargo. They found that they were spending US$3.2 billion a year on external consultants.

And what they decided to do was to take US$1 billion, and say, “I think this would be better spent giving more resources to the people we employ, the people we actually have.”

And we’re seeing this at all levels across all banks. There’s a much more renewed focus on execution.

You can look at the tools that have been around for other industries for decades — things like remote working, different collaboration tools — and they’ve largely been kept out of the hands of pretty smart but not very empowered bank employees for many years. 

More power to the workforce

This crisis has pushed things like Zoom adoption into mainstream banking. 

And I’d argue that for all these visionary blockchain projects that have been discussed over the years, the investment in Zoom — in just having remote working capabilities — has probably yielded more shareholder benefit than all the blockchain projects combined for banks.

And for me this is hugely positive.

Because anything that allows the staff to have more resources, more tools to get things done, helps to close this knowing-doing gap.

It helps to stop this instance where people on the working level know what should be done but they just can’t execute it, they just can’t do it. 

From grand visions to quick wins

This focus on quick wins is taking some of the emphasis away from big vision and game-changing topics which are philosophically interesting but don’t move the bottom line, into very tangible quick wins.

And it’s changing the perception of technology and fintech away from something that is ancillary from the core business, and something that generates PR but doesn’t change the way that a bank does things, into something that is actually a way to generate shareholder return, a way to generate quick wins. 

I think that’s hugely positive right now and I think it will be hugely positive for years to come.